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Morningstar Investment Funds (Retail) Additional Information Document 30 September 2019
The Issuer and Responsible Entity is: Morningstar Investment Management Australia Limited Level 3, International Tower 1 100 Barangaroo Avenue Barangaroo NSW 2000 Tel: 1800 951 999 (Toll Free) Fax: +61 2 8572 9913 Web: www.morningstarinvestments.com.au Email: [email protected]
Morningstar Investment Funds (Retail) Additional Information Document | 30 September 2019
Real Return ARSN PDS date
× Morningstar Multi Asset Real Return Fund 092 232 356 30 September 2019
× Morningstar High Growth Real Return Fund 092 226 358 30 September 2019
× Morningstar Growth Real Return Fund 092 234 136 30 September 2019
× Morningstar Balanced Real Return Fund 092 229 975 30 September 2019
× Morningstar Moderate Real Return Fund 092 232 589 30 September 2019
Sector
× Morningstar Australian Shares Fund 092 226 563 30 September 2019
× Morningstar International Shares (Unhedged) Fund 092 229 199 30 September 2019
× Morningstar International Shares (Hedged) Fund 092 227 435 30 September 2019
This Additional Information Document has been issued by Morningstar Investment Management Australia Limited (ABN 54 071 808 501; AFSL 228986) (‘Morningstar’) Information in this Additional Information Document forms part of the Product Disclosure Statements (each a PDS and together the PDSs) for the following Morningstar Funds (collectively the ‘Funds’ and individually the ‘Fund’) managed by Morningstar.
You should read this Additional Information Document together with the relevant PDS before making a decision to invest in the Fund(s). This Additional Information Document and the PDSs are available online at morningstarinvestments.com.au or you can request a free copy by calling Morningstar on 1800 951 999 (Toll Free). The information in this Additional Information Document is general information only and does not take into account your personal investment objectives, financial situation or particular needs. You should consider the appropriateness of the Fund(s) having regard to your own objectives, financial situation and needs and seek professional advice tailored to your personal circumstances before making an investment decision. Neither Morningstar nor any other related body corporate, guarantees the performance of the Fund(s) or the return of capital or income. Your investment in the Fund(s) is subject to investment risk. This could involve delays in repayment and loss of income or loss of capital invested.
3
Contents 1. Investment in and redeeming from the Fund 3
2. Further risks 4
3. How we invest your money 4
4. Fees and costs 5
5. Additional information about tax 11
6. How to apply 13
7. Additional information 13
8. Definitions 15
1. Investment in and redeeming
from the Fund The following information forms part of Section 2 of
the PDS.
How to Submit Your Request
Unless you are using the managed funds settlement
service operated by the ASX (‘mFund’), all requests to
invest, redeem or switch must be submitted using the
contact details provided on the last page of this
document.
All requests to invest must be made using the
application form which accompanies the PDS and
which is available from our website
morningstarinvestments.com.au.
Please use the contact details shown on the last page
of this document to obtain a copy of the forms required
when making an application, redemption or a switch.
Making a Redemption
Unless you are using mFund, redemption requests
received prior to the cut-off time (i.e. 2:00pm Sydney
time) on a Business Day, will generally receive the exit
price calculated as at the close of business that day.
For redemption requests received after the cut-off time
(i.e. 2:00pm Sydney time), you will generally receive
the exit price calculated as at the close of business on
the next Business Day.
Restrictions on Withdrawals
Under the Fund’s Constitution, redemption proceeds
must be paid within maximum timeframes after the
redemption request is received. For all Funds, their
Constitution requires redemption proceeds to be paid
within 30 days.
Morningstar will, however, endeavour to pay
redemption requests as soon as possible. Normally,
redemption proceeds will be paid within 6 Business
Days following receipt of your written request.
In exceptional circumstances, redemptions may take
longer than the periods described above. This may
occur where it is impractical to calculate the unit
prices, where other investors may be disadvantaged
by a redemption, where a delay is in the best interests
of all investors or as otherwise permitted by the
relevant Constitution and the law.
Where underlying Fund assets can only be realised
after a substantial notice period, this could also lead to
a longer redemption period. If the liquidity of
underlying Fund assets prohibits payment of part or all
of your redemption proceeds in cash, then you may be
required to receive part or all of your redemption
proceeds in specie, meaning you may need to retain
units in an illiquid Fund until such time as the
underlying assets can be realised. Under the
Corporations Act, a fund is illiquid if it has less than
80% liquid assets (generally cash and marketable
securities).
If the Fund is not liquid, you may only redeem from
the Fund in accordance with the terms of a
redemption offer made by Morningstar.
Transferring Units
You may transfer units to another person at any time
providing appropriate consent has been obtained.
However, you may be required to meet appropriate
anti-money laundering requirements and other relevant
disclosure. Please contact Morningstar, on the contact
details shown on the last page of this document, for
further information.
Unit Prices
The unit price is calculated by dividing the Net Asset
Value (‘NAV’) of the Fund by the number of units on
issue in the Fund at the relevant time plus an
allowance for transactional and operational costs
(including the buy/sell spread). Please refer to page 8
for more information on buy/sell spreads.
Where the Fund has more than one class of unit, the
unit price of each class of unit is calculated by dividing
the NAV of that class of unit by the number of units on
issue in that class at the relevant time plus an
allowance for transaction costs. The NAV of a class is
calculated as if there was a separate Fund
corresponding to the class of unit.
Valuations are generally undertaken on each
Business Day, subject to the Fund’s Constitution.
Valuations of alternative investments may be
performed less frequently. If the Fund is exposed to
alternative investments, unit prices will generally
reflect the last available valuation. Please refer to
page 5 for more information on alternative
investments.
Units are priced on a ‘forward’ or ‘next price’ basis.
Under this method, unit prices are struck using values
available at the next valuation cut-off time after the
processing time.
Valuation
Under each Constitution, the value of any property will
be its current market value determined by reference to
a recognised independent source, by a method
determined by a qualified independent valuer or any
other appropriate method which is capable of being
verified independently by a
registered company auditor including, but not
limited to, estimates of value based on objective
criteria, where actual figures are not available and
where there will be no significant detriment to any
investor. Fund property may be revalued whenever it
is thought fit. Property acquired must be valued at
cost (including acquisition cost) until revalued.
Under each Constitution, discretion may be exercised
which can impact unit prices. The manners in which
these discretions are exercised are outlined in
Morningstar’s unit pricing policy. Investors may obtain
a copy of Morningstar’s unit pricing policy (and any
records ASIC requires) from Morningstar free of
charge upon request.
Indirect Investors This section only applies to investors who are investing
in the Fund through an IDPS, i.e. as an Indirect
Investor in the Fund.
If you are investing through an IDPS, your application
should be made using the forms provided by your IDPS
operator only. Do not use the forms provided by
Morningstar. Please consult your adviser or IDPS
operator if you are uncertain if this applies to you.
If you are investing through an IDPS, you are directing
your IDPS operator to arrange for your monies to be
invested in the Fund on your behalf. Accordingly, you:
× are not a direct investor in the Fund; × are not registered as an investor in the Fund;
× do not receive distributions of income, tax
statements or reports directly from Morningstar (as
these will be made to your IDPS operator or its
custodian); and
× are not entitled to receive notice of, attend or
vote at investor meetings or participate directly
in the winding up or termination of the Fund.
Your IDPS operator acquires these rights and can
exercise, or decline to exercise them, on your
behalf. References in the PDS to ‘you’ or ‘your’
should be read as references to your IDPS
operator, as the context indicates.
Your IDPS operator will be responsible for
confirming transactions, providing reports and
responding to your enquiries. You should refer to
your IDPS operator as the first point of contact
regarding any enquiries about your investment.
You will also need to notify your IDPS operator of
any changes in your details.
Please refer to your IDPS operator for information
on:
× how to invest or make additional investments or
switch between the Fund and another fund (as
you do not complete the application form or any
other forms available from Morningstar);
× the minimum initial investment, additional
investment or switching amounts;
× how to redeem investments and the minimum
redemption amounts;
× details of cooling-off rights (if any) that may apply
to your investment in the IDPS; and
× any additional fees charged by your IDPS operator
that may apply.
× Indirect Investors should read the guide provided by
their IDPS operator and should also seek appropriate
professional taxation and investment advice.
Morningstar is not responsible for the operation of any
IDPS.
4
2. Further risks The following information forms part of Section 4 of
the PDS.
This section contains additional information about
significant risks of managed investment schemes
more generally, while the PDS contains specific risk
factors relevant to the Fund.
Risk Levels/Profiles
In the Fund’s investment profile shown in its PDS, if it
has a:
× ‘High’ risk level, it may experience periods of
negative (and/or volatile) returns and loss of
value, although it also offers the potential for
greater returns and greater value;
× ‘Medium’ or ‘Medium to High’ risk level, it may
experience periods of negative (and/or volatile)
returns but generally not as frequently as funds
with a ‘High’ risk level. These funds may also offer
greater potential for capital growth than funds
with a ‘Low’ risk level;
× ‘Low to Medium’ or ‘Low’ risk level, it is not
expected to have frequent periods of negative
(and/or volatile) returns, although you may
experience negative returns in certain market
conditions; and
× ‘Very Low’ risk level, it is not expected to have
negative (and/or volatile) returns but may do so
in certain market conditions.
Before investing, it is important that you understand
the risks involved in the investment you are
considering, your tolerance to these risks, your age
and your investment time horizon.
Other Risks
In addition to the more significant risks described in
the PDS, the following risks may impact your
investment and affect managed investment schemes
generally:
Foreign Currency Risk Movements in exchange rates between the Australian
dollar and foreign currencies can affect the
performance of the Fund if it has exposure to
international investments. When foreign currencies
fall in value relative to the Australian dollar, this can
have an adverse impact on investment returns for the
Fund. Currency hedging may be used to reduce the
magnitude of currency risk.
Country Risk
There is a risk that a country where assets are located
in which the Fund invests could become politically or
economically unstable, which may prevent assets
(such as shares) being sold or the proceeds being
repatriated to Australia. This risk is generally higher in
countries classified as emerging markets.
Securities Lending Risk
Performance returns can be enhanced by
participation in a securities lending program. Risks
associated with securities lending include the loss of
collateral value in the event of borrower default, loss
of voting rights and operational risks.
Leverage Risk Morningstar does not use leverage to magnify the
returns from the Fund. However, the underlying
investments of the Fund may be leveraged. Leverage
magnifies both gains and losses. Investors in the Fund
do not have a contingent liability and will not be
required to contribute additional funds in the event
that underlying leveraged investments generate a loss.
Pricing Risk Less liquid investments may be priced infrequently
and, in order to ensure timely unit pricing,
their valuations may be based on estimates.
Short Selling Risk Short selling refers to the process of selling stocks that
you do not own (stocks are borrowed first before short
selling) and then buying them back at a future date,
with an expectation that the price of those stocks will
fall. The Fund may be exposed to short selling where
the market permits this trading strategy. Establishing a
short position involves a higher level of risk than
investing in a stock. When a Fund invests in a stock,
the maximum loss is generally limited to the amount
invested. With short positions, there is theoretically no
limit to the loss that may be incurred because the loss
will continue to increase as the price of the stock
increases.
Stock Specific Risk
Stock specific risk is the uncertainty of the return of a
stock, arising from factors that are specific to the
organisation that issues those stocks. It is generally
not related to events that affect other comparable
organisations or the market as a whole.
3. How we invest your money The following information forms part of Section 5 of
the PDS.
Morningstar aims to deliver consistent investment
returns by applying a disciplined investment process
built around in-depth investment research, a focus
on asset allocation and innovative portfolio
construction. We develop an investment strategy
designed to achieve a Fund’s investment objectives
and implement exposure to highly ranked investments
via a mix of strategies directly managed by
Morningstar and/or other investment managers.
Asset Allocation
Morningstar believes that asset allocation is of
paramount importance in the delivery of investment
return. Underpinning Morningstar’s approach to asset
allocation is its capital markets research. This
involves a review of the fundamental and technical
drivers of each asset class, and the development of
expected returns and risks. This research is used in
conjunction with the portfolio construction process to
develop the asset allocation and ranges for each
Fund.
Morningstar believes that reward for risk varies through time and is closely related to valuation. It therefore adopts an approach to investment strategy that involves adjusting the asset allocation from time to time within the allowable asset allocation ranges. Asset allocation is adjusted to help preserve capital
when the risk of loss is perceived to be high or to take advantage of an asset or assets offering an attractive risk/reward opportunity.
Investment Research
Research is one of the core foundations of the
Morningstar group. Indeed, the integrity and quality
of research is essential to its investment process.
Accordingly, Morningstar’s capital markets and
underlying investment/manager research is rigorous
drawing on the resources of the Morningstar group
globally, to deliver comprehensive fundamental
analysis across global asset classes, securities and
investment managers.
Risk Management
Morningstar recognises risk is multifaceted and
subjective in nature. The monitoring of risk is not
designed to be precise or reliant on one particular
metric. Morningstar feels precision and the heavy
reliance on one risk measure leads to potentially
poor risk management. The appropriate monitoring
of risk requires experience, judgment and a number
of qualitative and quantitative measures.
Morningstar recognises these characteristics of risk,
and therefore applies a sceptical, conservative and
practical approach to risk management utilising a
wide array of measures, with the goal of minimising
the permanent impairment of investor capital.
Investment Management
Morningstar will manage the investment process
for each Fund as described in its PDS.
Each Fund has an investment objective and risk level. Morningstar will review the investment objective and risk level of each Fund on an ongoing basis. Morningstar aims to provide affected investors with at least 30 days’ advance notice before material changes to investment objectives take effect.
In an attempt to achieve the investment objectives,
Morningstar set what is believed to be an
appropriate investment strategy and asset
allocation; select appropriate investments and if
applicable, appoint and terminate underlying
managers. We also monitor and review the Funds’
performance, investment strategy, investments,
underlying investment manager(s) and
implementation processes to ensure they are
consistent with the investment objectives. Where
appropriate, adjustments may be made to these
without prior notice. Morningstar’s investment
strategy may not achieve the investment objective.
Direct Strategies
Morningstar may directly manage some investment
strategies, where it believes this is appropriate. Where it
directly manages an investment strategy, Morningstar
selects the underlying investments, rather than the
investment managers. Morningstar manages direct
strategies using extensive proprietary research and stock
selection systems and processes, with a view to
achieving the investment objective of the particular
strategy, and where applicable contributing to the
investment objective of the diversified portfolio as a
5
whole.
Underlying Investment Managers
Depending on the type of investment strategy,
Morningstar may implement investment exposures via a
mix of active and passive underlying managers.
Managers are combined to build a portfolio that aims to
perform consistently with the investment objectives
through different environments. Active managers seek to
maximise outperformance within agreed risk constraints
relative to a benchmark, while passive managers seek to
deliver performance in line with a benchmark.
Morningstar believes the effective use of well-resourced
and experienced underlying managers, who have
aligned their interests with those of their investors and
who have a differentiated investment strategy, will
improve the chance of the Funds in meeting their
investment objectives.
Authorised Investments
The Funds may hold a broad range of investments
and asset classes, including:
× unlisted unit trusts;
× unlisted investments;
× shares listed on recognised stock exchanges
× real estate investment funds listed on
recognised stock exchanges;
× exchange traded funds;
× listed investment companies;
× hedge funds;
× foreign currencies;
× fixed income;
× cash and cash equivalents; × global infrastructure;
× derivatives (including futures); and
× alternative assets and alternative strategies
(refer below for more information).
The investments and asset classes held by the
Funds are explained in the Investment Profile in
Section 5 of the PDS.
Derivatives
Derivatives (such as options, futures, swaps, forward
rate agreements and forward foreign exchange
contracts) may be used to manage the assets of the
Fund. Where derivatives are permitted, they are used
to manage risk or to gain exposure to individual
securities, currencies and investment markets. The
total exposure created by underlying managers using
derivatives is limited by Morningstar establishing
specific and detailed guidelines for derivative usage
in each Fund’s investment mandate. Where the Fund
invests in derivatives directly, the use of derivatives
will be consistent with Morningstar’s investment
policies and procedures. Further information can be
found in Morningstar’s Derivative Risk Statement
which can be obtained free of charge by contacting
Morningstar on the contact details shown on the last
page of this document.
Alternative Investments Alternative strategies are defined as investment
strategies with returns that are expected to behave
differently to equity and fixed income returns over the
medium to long term. They may utilise hedging, short
selling, leverage, investment in securities outside
conventional benchmark indices and other strategies
that result in returns that do not closely track equity and
fixed income returns. The majority of these strategies are
typically used by managed investment schemes
commonly referred to as hedge funds which have
redemption terms, fees, legal structures and other
features not commonly found in traditional equity and
bond funds.
Securities Lending As part of Morningstar’s investment strategies, the
Fund’s investment returns may be enhanced by earning
revenue from participation in a securities lending
program managed by the Fund’s custodian.
The securities lending program involves lending selected
Fund securities to a third party (borrower) through the
custodian (agent) for a period of time, in return for a fee.
At the end of the period, the borrower returns the
securities, which are either the original securities or
more commonly are equivalent in number and type to
the original securities. As part of this arrangement,
borrowers provide collateral to the custodian.
Depending on the type of collateral lodged, the
securities lending program can earn revenue in one of
two ways. When the custodian, as agent, receives cash
collateral, they invest the cash and earn interest on the
cash. Where it receives non-cash collateral, a fee rate is
used to determine the fees payable and will depend on
the size of the loan, duration, availability and other
relevant circumstances. Any securities lending revenue
is shared between the Fund and the custodian.
While performance returns can be enhanced by
participation in a securities lending program, there are
some associated risks (see page 4 for further details).
4. Fees and costs The following information forms part of Section 6 of
the PDS.
Did You Know?
Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask the fund or your financial adviser. To Find Out More If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a managed funds fee calculator to help you check out different fee options.
6
Notes
1. The amount you pay for specific Funds is shown in Section 6 of the PDS and on page 7 of this Additional Information Document.
2. You may also incur a buy/sell spread when you buy/sell Fund units. An explanation of the buy/sell spread is found in on page 8.
3. Some IDPS operators may be paid an annual product access payment for offering the Fund on their investment menus. The product access payment is not an
additional fee paid by investors; it is paid for out of Morningstar’s management fee for the Fund. It does not reduce the returns an investor may receive.
4. Morningstar may from time to time negotiate management fees (by way of a rebate or waiver of fees) with investors who are wholesale clients (as the Corporations Act defines
that term).
5. Inclusive of GST after taking into account any expected RITC. Fees are rounded to two decimal places, but in practice the rates are calculated and applied at more
than two decimal places.
6. The estimated indirect costs shown represent our reasonable estimate of management costs you will incur in the future.
Type of Fee or Cost Amount How and When Paid
Fees When Your Money Moves in or Out of the Fund1
Establishment fee
The fee to open your investment. Nil Not applicable
Contribution fee
The fee on each amount
contributed to your investment
Nil Not applicable
Withdrawal fee
The fee on each amount you take
out of your investment
Nil Not applicable
Exit fee
The fee to close your investment. Nil Not applicable
Management Costs
The fees and costs for
managing your investment
Direct
Costs
Management fee % p.a.2,3,4
Management fees range from 0.36%
p.a. to 0.70% p.a. of the amount you
have invested.
The fee paid to Morningstar to manage the Fund. The fee is
accrued daily in the unit price and paid monthly by deducting the
required amount from the assets of the Fund. The fee includes all
fees and running expenses (excluding abnormal expenses) directly
charged by Morningstar to the Fund.
Where the Fund invests with underlying managers through an
underlying managed investment scheme or investment mandate,
Morningstar pays the underlying managers’ non-performance
related management fees out of its management fee percentage.
Indirect
Costs6
Estimated performance-related fees5
Certain underlying managers charge
performance-related fees. The
underlying managers typically charge
between 10.25% and 20.50% of
performance in excess of a benchmark
index, although they can be higher.
The Fund has exposure to investments which charge performance-
related fees. Performance-related fees are paid out of the Fund’s
assets when specific investment performance targets are met.
Please refer to ‘Performance-related fees’ for more information.
Other estimated indirect costs
Indirect costs range from 0.00% to
0.11%.
The Fund incurs other indirect costs that are payable from the
Fund’s assets and are generally reflected in the unit price of the
particular Fund. Please refer to ‘Indirect costs’ for more
information.
Service Fees
Investment switching fee1
The fee for changing the
investment options
Nil Not applicable
7
Management costs
The table below sets out our reasonable estimate of management costs you will incur in the future. There is no guarantee that our estimates will be in fact the actual management costs incurred or that the Funds will perform as estimated.
Morningstar Investment Funds Management
Fee (% p.a.)7
Estimated Indirect Costs/Indirect Cost Ratio (% p.a.)
Total Estimated Management Fees
and Estimated Indirect Costs (% p.a.) Estimated
Performance-Related Fees
Estimated Other Indirect Costs
Real Return
Morningstar Multi Asset Real Return Fund8 0.70% 0.04% 0.06% 0.80%
Morningstar High Growth Real Return Fund8 0.63% 0.02% 0.05% 0.70%
Morningstar Growth Real Return Fund8 0.57% 0.04% 0.10% 0.71%
Morningstar Balanced Real Return Fund8 0.51% 0.04% 0.10% 0.65%
Morningstar Moderate Real Return Fund8 0.44% 0.05% 0.11% 0.60%
Sector Specialist
Morningstar Australian Shares Fund 0.36% 0.00% 0.00% 0.36%
Morningstar International Shares (Unhedged) Fund 0.38% 0.00% 0.00% 0.38%
Morningstar International Shares (Hedged) Fund 0.39% 0.00% 0.00% 0.39%
Notes
7. Management fee % includes all fees and running expenses (excluding abnormal expenses) directly charged by Morningstar to the Fund. Morningstar pays non-
performance related investment management fees of underlying managers out of its own management fee %. Management fee percentages are inclusive of
GST after taking into account any expected RITC. Management fee percentages are rounded to two decimal places, but in practice the rates are calculated and
applied at more than two decimal places. For more information on fees and costs, please refer to the following pages.
8. These Funds may have exposure to underlying managers which charge performance-related fees. Performance-related fees are an additional cost to you and
impact the returns you may receive. For more information on performance-related fees, please refer to information on page 10.
8
Buy/sell spreads
Morningstar Investment Funds Buy/Sell Spread %9 Minimum Initial Investment
Dollar Example of Buy/Sell Spread Included in Unit Price Based on the Minimum Initial
Investment/Withdrawal10
Real Return
Morningstar Multi Asset Real Return Fund 0.10% / 0.10% $10,000 $10 / $10
Morningstar High Growth Real Return Fund 0.10% / 0.10% $10,000 $10 / $10
Morningstar Growth Real Return Fund 0.10% / 0.10% $10,000 $10 / $10
Morningstar Balanced Real Return Fund 0.10% / 0.10% $10,000 $10 / $10
Morningstar Moderate Real Return Fund 0.10% / 0.10% $10,000 $10 / $10
Sector
Morningstar Australian Shares Fund 0.07% / 0.07% $10,000 $7 / $7
Morningstar International Shares (Unhedged) Fund 0.08% / 0.08% $10,000 $8 / $8
Morningstar International Shares (Hedged) Fund 0.10% / 0.10% $10,000 $10 / $10
Notes
9. The buy/sell spreads are current as at the date of this Additional Information Document. For up to date buy/sell spreads, please contact Morningstar using the
contact details shown on the last page of this document.
10. The example is based on the assumption that the unit price (before the estimate for transaction costs) is $1.00 when you invest the minimum initial investment
amount in each Fund and that the unit price (before the estimate for transaction costs) is $1.00 when you withdraw the minimum investment amount from each
Fund.
9
Transactional and operational costs
The table below sets out the transactional and operational costs which have been incurred in each Fund. We have reflected the total explicit transactional and
operational costs incurred, less the amount of buy/sell spread recovered from applications and redemptions, resulting in the net explicit costs incurred in a Fund. In
addition, we have reflected the implicit costs incurred. All transactional and operational costs are presented as a percentage of the average net asset value and are
based on the financial year ending 30 June 2019.
Morningstar Investment Funds Explicit
Transaction
Costs11
Less: Buy/Sell
Spread Recovery12
Equals: Net
Explicit
Transaction Costs
Plus: Implicit
Transaction
Costs13
Net Transaction
Costs
Real Return
Morningstar Multi Asset Real Return Fund 0.14% 0.11% 0.03% 0.10% 0.13%
Morningstar High Growth Real Return Fund 0.24% 0.14% 0.10% 0.03% 0.13%
Morningstar Growth Real Return Fund 0.13% 0.08% 0.05% 0.05% 0.10%
Morningstar Balanced Real Return Fund 0.13% 0.11% 0.02% 0.05% 0.07%
Morningstar Moderate Real Return Fund 0.12% 0.10% 0.02% 0.07% 0.09%
Sector Specialist
Morningstar Australian Shares Fund 0.13% 0.07% 0.06% 0.00% 0.06%
Morningstar International Shares (Unhedged)
Fund 0.09% 0.02% 0.07% 0.01% 0.08%
Morningstar International Shares (Hedged)
Fund 0.19% 0.07% 0.12% 0.01% 0.13%
Notes
11. ”Explicit” costs are deducted from the assets of the Fund for a particular transaction, such as brokerage and custody settlement. OTC derivative costs and
borrowing costs are captured as “Explicit costs”.
12. Where the buy/sell spread recovery is greater than total transaction costs, a nil net transaction cost is disclosed.
13. “Implicit” costs arise as a result of bid-offer differences being applied to assets traded by the Fund. These costs are factored into the individual asset value and
reflected in the Fund’s unit price.
10
Example of Annual Fees and Costs
The PDS for the Fund contains an example of how
fees and costs would have affected your investment
over the last financial year. You should use this
example to compare the Fund with fees and costs of
other managed investment products over the last
financial year.
You should read the information in the PDS for the
Fund about 'Fees and costs' before making a
decision.
Management Costs
Management Costs include fees and costs charged
directly to the Fund (such as management fees and
running expenses) as well as other indirect costs
incurred which reduce the return of the Fund (such
as performance related fees and other indirect
costs).
Management Fees
The management fees are charged by accruing
them within the Fund’s unit price on a daily basis.
On a monthly basis, management fees are paid to
Morningstar from the Fund’s assets. The maximum
management fee allowable under the Fund’s
Constitution is 3% p.a. of the NAV of the Fund. The
Fund’s Constitution allows the management fee
only to be charged in other ways negotiated with
you, for example by invoicing you directly.
For more information about if and when you can
negotiate the management fee, please contact
Morningstar.
For wholesale clients, in line with ASIC policy (as
amended from time to time), Morningstar may:
× charge a lower management fee than those
currently specified in the PDS; or
× rebate a part of the management fee.
Staff Investors are allowed to invest in the Fund with
differing arrangements to the standard offer in
accordance with ASIC policy. Staff Investors are
subject to Morningstar’s internal human resource
policies and procedures governing the staff
investment program.
Underlying Manager Fees
Where the Fund invests with underlying managers
through an underlying managed investment scheme
or investment mandate, Morningstar pays the
underlying managers’ non-performance related
investment management fees out of its management
fee percentage (i.e. these expenses are incurred by
Morningstar, not the Fund).
Morningstar’s management fee percentage does not
cover performance related fees charged by
underlying managers and/or running costs of an
underlying manager’s managed investment scheme
(where applicable). Fees and costs not covered by
Morningstar’s management fee are indirect costs to
you and are reflected in the net return of your
investments. Refer to ‘Performance- Related Fees’
below for more information on underlying manager
performance-related fees.
Running Expenses As authorised by the Constitution, Morningstar is
entitled to be reimbursed from the Fund for all
expenses incurred in managing and administering
the Fund. Under the Constitution, there is no
specific limit on the level of expense recovery from
Fund assets.
Running expenses are all expenses incurred in
managing and administering the Fund. These
exclude fees paid to underlying managers, abnormal
expenses and transactional and operational costs.
Currently, running expenses of the Fund incurred in
the normal course such as custody, certain taxation
or legal advice, as well as audit costs are paid out of
Morningstar’s management fee. These running
expenses are not an additional cost to you.
Abnormal Expenses
Abnormal expenses are additional Fund expenses
that may arise from time to time in relation to the
Fund. These include costs incurred in litigation,
convening a meeting for investors or winding up
the Fund.
Abnormal expenses may be recovered from the
Fund’s assets and are not included in the
management fee. If incurred, they are accrued, if
and when, they are able to be estimated and
reflected in the unit price at that time (see page 3
for more information about unit prices). These costs
are incurred infrequently.
Indirect Costs Indirect costs include expense recoveries and other costs incurred directly in underlying funds. These costs are payable from the Fund’s assets.
Indirect Costs include:
Performance-Related Fees
Certain underlying managers may charge
performance-related fees. These fees are payable if
specific investment performance targets are met.
These fees are structured so that an underlying
manager’s remuneration is linked to the investment
return achieved over the benchmark.
If the Fund is exposed to performance-related
fees, this is explained in the PDS. If the Fund is
not exposed to performance-related fees, it may
be in the future, and affected investors will be
notified at least 30 days before such underlying
manager changes are implemented.
The management costs part of the ‘Fees and costs’
table on page 6, shows underlying managers’
performance-related fees are typically between
10.25% and 20.5% of performance in excess of the
relevant benchmark, although they can be higher or
lower.
Performance-related fees payable to underlying
managers are accrued within an underlying fund’s unit
price.
Any performance-related fees incurred by the Fund will be
an indirect cost to you. The method of charging
performance-related fees (including the percentage
amount of the fee) may change in the future. The PDS and
Additional Information Document will be updated if changes
in performance-related fees and the change results in a
material change in the estimated performance-related fees
exceeding the range disclosed in this Additional Information
Document.
Investors can also contact Morningstar, on the contact
details shown on the last page of this document, for
further information on the performance-related fees that
currently apply to their investment.
Other Indirect Costs The Funds may also gain investment exposure via
underlying managed investment schemes, exchange
traded funds and via underlying managers accessed via
structured products/OTC derivatives. Fees and costs
charged by these investments are not covered by
Morningstar’s management fee and are indirect costs to
you. Our estimates of these costs are included in the
indirect costs showing on page 8 of this document.
Transactional and Operational Costs
Transactional and operational costs are costs and
expenses incurred in the acquisition or disposal of Fund
assets. These include brokerage, duties and taxes. They
reflect the costs that would ordinarily be incurred by an
investor who invested directly in these assets.
Transaction costs are normally incurred directly by the
Fund. However, where they are incurred by Morningstar
on behalf of the Fund, these will be reimbursed from the
Fund and/or reflected in the unit price of the Funds.
Buy/Sell Spreads
The difference between the entry price and exit price of a
unit is called the ‘buy/sell spread’. This covers the
estimated explicit transaction costs of buying or selling
investments when you apply for, switch or redeem units
from a Fund. The buy spread is added to the price
payable on an application for units and the sell spread is
deducted from the amount payable to you when you
redeem units. Each is expressed as a percentage of the
unit price.
The buy/sell spread amounts paid by transacting
investors are retained in the Fund to cover these
transaction costs. The buy/sell spreads applying to the
Fund are shown in Section 6 of the PDS. Spreads may
change without notice, for example if transaction costs
change. Morningstar has a Unit Pricing Policy in place,
which sets out the guidelines and relevant factors for
calculating unit prices - including buy and sell spreads.
You may obtain a copy of this policy (and any records
ASIC requires to be maintained) free of charge by
contacting Morningstar on the contact details shown on
11
the last page of this document.
mFund costs
Your broker may charge you a fee to help you
acquire or redeem units via mFund.
Commission
No commissions are paid to third parties, such as
licensed financial advisers, IDPS operators or other
licensees. Morningstar may pay ‘shelf space’ fees for
a Fund to be listed on an IDPS investment menu
where it is permitted to do so.
Payments to your financial adviser You may agree with your financial adviser to pay
advice fees for financial planning services provided to
you. These advice fees are additional to the fees
shown in the fee table on page 7, and are paid to
your financial adviser, not to Morningstar as the
Responsible Entity.
Advice fees may be in the form of an: × Investment Advice Fee; and/or × Ongoing Advice Fee.
You and your financial adviser determine the amount of any advice fees and how they will be charged.
Changes in Fees and Costs
The Fund’s fees and costs may change within limits
allowed by its Constitution and investors will be
notified in writing by Morningstar of any increases in
the fees and costs at least 30 days before
implementation. If the Fund ever sought to charge
fees above the maximums permitted in its
Constitution, investor consent would be sought.
GST
Fees and costs charged to the Fund attract 10% GST,
which is charged to and borne by the Fund. All fees
and costs disclosed in the PDS are inclusive of GST, to
the extent applicable, after taking into account any
expected RITCs. The Fund will claim RITCs where
possible under the GST regulations. These credits will
reduce the overall cost of GST to the Fund and will be
reflected in the unit price. The net GST is the net cost
after taking into account GST and RITCs.
Switching Fee
A switch between Funds is treated as a redemption
from one and an application into another. The Funds
do not charge a switching fee (or an entry or exit fee
on the amount of the switch) but both Funds’ buy/sell
spreads will apply to switches.
5. Additional information about tax The following information forms part of Section 7 of
the PDS.
The following is a brief outline of the Australian
taxation consequences of investing in the
Funds. This information assumes that
investors hold their units in the Funds on
capital account.
Investors are strongly advised to seek
professional taxation advice. Please be
aware that not all the following statements
will apply to all investors.
This information is intended as a general guide only
and is based on Australian taxation laws that are
current as at the date of this Additional Information
Document. These laws, and the interpretation and
administration of them, may alter over time.
The Funds are established as separate unit trusts.
The effect of tax on the Funds, and hence your
investment in the Funds, can vary depending on
factors such as the type of investment, the timing
of investment transactions and entry and exit of
other investors in the Funds.
Attribution Managed Investment Trust (AMIT)
It is expected that the Funds will qualify as
Attribution Managed Investment Trusts (‘AMITs’)
and each Fund has made the irrevocable election
into the AMIT regime.
The Funds have made the irrevocable election
available to managed investment trusts (“MITs”) to
apply deemed capital account treatment for gains
and losses on disposal of certain investments
(including shares and units in other funds, but
excluding derivatives and foreign exchange
contracts), with the exception of Morningstar
International Bonds (Hedged) Fund which has not
made the election.
Attribution of Taxable Income
The Funds are Australian residents for tax purposes. It
is intended that each Fund’s trust components will
be attributed to investors on a fair and reasonable
basis each income year under the AMIT regime. For
income years in which the Funds do not qualify as
an AMIT, it is intended that investors will be presently
entitled to all of the income of the Funds.
Accordingly, Morningstar as Responsible Entity of the
Funds should not pay Australian income tax on the
taxable income of the Funds.
The Funds cannot attribute or distribute losses to
investors. Any revenue losses may be carried
forward and offset against the taxable income of the
Fund in subsequent years where certain conditions are
met. Capital losses may be carried forward and offset
against the capital gains of the Fund in subsequent
years.
An Australian investor’s attributed trust components
under the AMIT regime, or the investor’s share of
the net income of the Fund for a year in which the
Fund is not an AMIT, including amounts received in a
subsequent year or which are reinvested, forms part
of the investor’s assessable income of that year.
The amounts attributed to you, or distributions you
receive may include different types of income, which
reflect the income derived by the Fund, for example:
× capital gains;
× assessable income (e.g. foreign income and
franked dividends);
× non-assessable amounts (e.g. tax deferred distributions); and
× tax offsets (i.e. franking credits and foreign income tax offsets).
You will be provided with an AMIT member annual
(‘AMMA’) statement or annual tax statement for tax
purposes after 30 June each year, to assist you (and
your adviser) in determining your tax position. This
tax statement will advise you of the attributed trust
components or distribution components (if any) to
include in your tax return.
In addition, the statement will advise you of the non-
assessable amounts (if any) of the distribution; that is,
those amounts that have been distributed to you but
are not included in assessable income. Generally,
such amounts will reduce your tax cost base in the
units in the Fund. Should your tax cost base be
reduced below zero after one or more cumulative
distributions of non-assessable amounts, the
amounts in excess of your tax cost base should be a
capital gain that should be included in your
assessable income. Depending on the type of entity
you are, you may be entitled to a capital gains tax (CGT)
discount (refer below).
For income years in which the Funds qualify as an
AMIT, if the trust components attributed to an
investor for tax purposes are not actually paid to
the investor, they may be entitled to an upward
tax cost base adjustment for their units in the
Fund. The relevant cost base adjustments will be
advised to investors in the AMMA statement they
receive after 30 June each year.
Attribution of Capital Gains
Capital gains attributed or distributed to you by
the Funds should be eligible to benefit from the
50% CGT discount concession where the assets
have been held by the Fund for 12 months or
more, and certain other conditions are satisfied.
To the extent that a trust component attributed
or distributed to you from the Funds includes a
CGT discount concession amount, the amount
should not be assessable income where you are
an individual or trust and you hold your units on
capital account. In certain limited circumstances,
such amounts may require an adjustment to the
12
tax cost base of your units in the Fund. Investors
that are companies and complying
superannuation entities may not receive the full
benefit of the CGT discount concession as
companies are not entitled to the CGT discount
and complying superannuation entities are
entitled to a discount of 33.33%.
If you redeem units in the Funds, you will also
need to include any capital gains or losses you
have made in the calculation of your net capital
gain or loss for the income year (unless you are a
non-resident investor that may not be liable for
Australian capital gains tax (‘CGT’) – see ‘Non-
Resident Investors’ below). Depending on the
type of entity you are, you may be entitled to a
CGT discount (refer below).
On redemption of units, you may receive both
capital proceeds and an income component
representing your share of the undistributed
income for the year up to the redemption date. In
addition, Morningstar as Responsible Entity of the
Fund may choose to allocate any gains arising
from the redemption to you. Any such attribution
or income distributions should be included in the
investor’s assessable income in the income year
the Fund’s trust components are attributed to
the investor (for an AMIT), or the income year in
which present entitlement arises (for non-
AMITs). Morningstar will notify investors of the
attribution or income entitlement in the AMMA
statement or annual tax statement issued after
the end of the financial year in which the units
in the Fund were redeemed.
Franked Distributions/Franking Credits
The trust components attributed or distributed to
you from some of the Funds may include franked
distributions and attached franking credits. Subject
to satisfying certain criteria, franked distributions
generally entitle Australian resident investors to
obtain a tax offset (the franking credit) against their
income tax liability. If the franking credits exceed
the tax payable on your taxable income, the excess
credits may be refundable to you if you are a
resident individual or complying superannuation
fund. Excess franking credits may generate tax
losses if you are a corporate entity.
Foreign Income and Foreign Income Tax Offsets
Where foreign withholding tax has been paid by the
Funds in respect of foreign investment of Fund
assets, the Funds will generally pass on any available
corresponding foreign income tax offsets to resident
investors. Investors may be eligible to offset these
foreign income tax offsets against any Australian tax
payable on their assessable foreign source income.
Morningstar will advise investors of their share of
foreign income tax offsets in the AMMA statement
or annual tax statement.
Taxation of Financial Arrangements
The Funds have opted into the taxation of financial
arrangements (TOFA) regime under Division 230 of
the Income Tax Assessment Act 1997 to adopt the
default methods. Morningstar will continue to
monitor whether the Funds should elect any of the
alternative methods. The impact of the TOFA regime
is not expected to materially change the taxation
consequences of income in the Funds.
Disposal or Transfer of Units in the Funds The disposal of units, either by redeeming,
switching or transferring units, may lead to a CGT
liability.
You may be entitled to the capital gains discount (of
50% for Australian resident trusts and individuals or
33.33% for complying superannuation funds) on
capital gains, if you have held your units in the Fund
for at least 12 months (excluding date of acquisition
and disposal) and other conditions are satisfied. Any
capital losses you have from other sources should
be offset against the grossed-up capital gain before
applying the capital gains discount. Companies are
not entitled to the discount on their capital gains,
including discount capital gains attributed or
distributed by a Fund.
Non-Resident Investors
Australian source income (e.g. interest, dividends,
and other Australian sourced income and gains)
attributed or distributed to a non-resident investor
may be subject to Australian withholding tax.
The rate of withholding tax will depend on the type
of income and the country of tax residence of the
investor, whether the Fund qualifies as a MIT and
any Exchange of Information Agreement or Double
Tax Treaty that the investor’s country of tax
residence has with Australia.
In most cases, these withholding taxes are each a
final tax. As a result, the non-resident investor
should not be entitled to a credit in Australia for any
withholding tax paid or be liable to further
Australian income tax on income from which
withholding tax has been withheld.
Foreign sourced income attributed or distributed to
a non-resident investor should generally not be
subject to tax in Australia unless, for example, the
investor has a permanent establishment in
Australia.
In broad terms, any capital gains attributed or
distributed by the Funds will be taxable to non-
resident investors only to the extent that the capital
gain was in respect of taxable Australian property
(that is, typically Australian real property or shares
or units in an entity whose majority underlying
value is derived from taxable Australian property
based on current market values of the entity’s
assets). The statement provided to investors after
30 June each year will disclose the extent to which
an attributed or distributed capital gain is in respect
of taxable Australian property.
Generally, investors who are non-residents of
Australia for income tax purposes (and do not have
an Australian permanent establishment) will only
be subject to the Australian CGT provisions on the
disposal of their units if their units are taxable
Australian property. A non-resident investor’s units
are generally taxable Australian property if:
× they and their associates hold 10% or more
of the units in the Fund at either the time
they dispose of their units or throughout a
12-month period that began no later than 24
months before that disposal time; and
× more than 50% (by market value) of the
Fund’s assets comprised (directly or
indirectly) of interests in taxable Australian
real property.
However, based on the current investments and
investment approach of the Funds as at the date of
issue of this Additional Information Document, it is
not expected that the second condition would be
satisfied.
Non-resident investors who hold their units in the
course of carrying on a business through an
Australian permanent establishment will be subject
to Australian CGT on the disposal of their units in the
same way as residents. This is so whether or not
such non-resident investors hold more or less than
10% of the units in the Fund.
It is strongly recommended that non-resident
investors obtain their own tax advice when disposing
of units in the Funds. It should also be noted that you
may be subject to the tax laws in your country and
should consult a taxation adviser before investing.
Tax File Numbers (TFN) and Australian Business
Numbers (ABN)
It is not compulsory for you to quote your TFN or
ABN. If you are making this investment in the course
of a business or enterprise that you carry on, you
may quote an ABN instead of a TFN. Failure by you
to quote an ABN or TFN, or claim an exemption, may
cause the Fund to withhold tax at the top marginal
rate plus any additional levies on gross payments
including distributions or attribution of income to
you. You may be able to claim a credit in your tax
return for any TFN or ABN tax withheld. By quoting
your TFN or ABN it will be applied to all your
investments with the Fund. If you do not want to
quote your TFN or ABN for some investments, please
notify Morningstar.
Changes in the Tax Law
The expected tax implications of investing in the
Funds described in this tax disclosure may change as
a result of changes in the taxation laws and
interpretation of them by the Courts and/or the
Australian Tax Office.
It is recommended that investors obtain independent
13
taxation advice that takes into account your specific
circumstances regarding investing in the Funds and
the potential application of any changes in the tax
law.
GST
The issue, redemption or transfer of units in the
Funds will not attract GST under current GST law.
Investors should seek independent advice in
relation to the GST consequences of their
investment.
6. How to apply The following information forms part of Section 8 of
the PDS.
Once your application has been processed by our
registry services provider, Link Market Services
Limited (Link Market Services), a confirmation of
your investment showing your Investor Number, the
amount invested, the number of units issued, the
entry price and the date the units were issued,
will be sent to you usually within 3 Business Days
from the date of receipt of the application.
If you do not receive a confirmation, please use the
relevant contact details provided on the last page
of this document to confirm receipt of your
application.
No interest is received on application monies,
including monies for additional investments, and
no interest will be paid to you if for any reason
(such as failure to provide all identification
documentation required under Australian anti-
money laundering and other legislations) your
application is not processed.
You may make additional investments in the
Fund by completing the additional investment
application form which can be found on the
Morningstar website and paying the application
monies.
If you provide a correctly completed application
request, including anti-money laundering and
other information and cleared funds, prior to the
cut-off times on a Business Day, you will
generally receive the entry price calculated as at
the close of business on that Business Day. For
correctly completed application requests and
cleared funds received after the cut-off times,
you will generally receive the entry price
calculated as at the close of business on the next
Business Day. Refer to the application form for
details on cut-off times.
You become an investor in the Fund when you are
issued units in the Fund. Please refer to the details
on buy/sell spreads on page 8, unit prices on page
3 and switching fee on page 11 for more information.
7. Additional information The following information forms part of Section 9 of
the PDS.
Information on Request from Morningstar
You may contact Morningstar between 9:00 am and
5:00 pm (Sydney time) on any Business Day to assist
with any questions you might have, or further
information you may require, in relation to your
investment in the Fund.
Morningstar’s contact details are shown on the last
page of each PDS as well as this Additional
Information Document. If you are an Indirect
Investor, the following information does not apply.
Changing Your Details
You must notify any change to your details, including
contact details, distribution instructions, bank
account details or account operating instructions.
To advise changes, please complete the change of
details form at
morningstarinvestments.com.au/change-
details and submit it in accordance with the
instructions contained within.
Confirmation of Transactions and Reporting
You will be provided with a confirmation of your
transaction once it is processed, usually within 3
Business Days after we receive all relevant
information. This may be when you make your
initial investment, additional investment,
redemption, switch or transfer. A monthly
statement detailing your transactions over the
previous month, including any distribution, will be
sent to you. At the end of each financial year, you
will be sent a statement for tax purposes. If at any
other time you would like a transaction statement
of your investment, unit price information or the
financial statements for a Fund, please contact
Morningstar on the contact details shown on the
last page of this document.
Privacy Statement
By applying to invest in the Funds, you consent and
agree to your personal information about you being
obtained and used by Morningstar and other parties
as explained in this Privacy Statement. The type of
information held includes your name, address and
other information that you provide when opening
your account, as well as records of your account
transactions and the value of your unit holding. Your information may be used to:
× provide the products and services you
request;
× efficiently manage and administer all
investments and services provided; and
× ensure that internal business operations run
smoothly, which may include fulfilling all legal
requirements and conducting confidential
systems maintenance and testing.
Your personal information may be provided
confidentially to external service providers, including
the custodian, auditors, taxation advisers, legal
advisers and information technology consultants.
We may disclose your personal information to our
related companies, but only so those related
companies can assist us with functions relating to
managing your account.
Morningstar’s related companies include our parent
company Morningstar, Inc., in the United States and
related companies worldwide. These related
companies are located in: Belgium, Brazil, Canada,
Chile, China, Denmark, Finland, France, Germany,
Hong Kong, India, Italy, Japan, South Korea,
Luxembourg, Mexico, the Netherlands, New Zealand,
Norway, Singapore, South Africa, Spain, Sweden,
Switzerland, Taiwan, Thailand and the United
Kingdom.
We may also use your personal information to
provide you with information about other products
and services that we or our related companies offer
from time to time (direct marketing). If you do not
wish information to be sent to you about other
products managed by Morningstar or our related
companies, please note this in the relevant box
provided on your application form or contact
Morningstar on the contact details shown on this
page.
Our custodian may disclose your personal
information in accordance with its Privacy Policy. The
custodian’s Privacy Policy lists the countries in
which recipients of personal information disclosed
by the custodian (or its agents) may be located.
The custodian’s Privacy is available at
morningstarinvestments.com.au/custodian-
privacy-policy.
Additionally, your personal information will be
disclosed if required by law to do so (including under
legislation in relation to anti-money laundering and
counter-terrorism and applicable taxation
legislation).
For information as to how you can access, correct
and update your personal information and how
Morningstar manages privacy related complaints
please refer to Morningstar’s Privacy Policy. A copy of
Morningstar’s Privacy Policy is available on our
website. Alternatively, you can contact our Privacy
Officer to request a free copy.
Privacy Officer Contact Details
Privacy Officer
Morningstar Investment Management Australia Limited
Level 3, International Tower 1
100 Barangaroo Avenue
Barangaroo NSW 2000
Tel: +61 2 9276 4532
Fax: +61 2 9276 4545
Email: [email protected]
14
Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act (‘FATCA’)
is a US law enacted to combat non-compliance by
U.S. taxpayers using foreign accounts. FATCA
requires foreign financial institutions (‘FFIs’) to
report to the US tax authority, or the relevant local
tax authorities for jurisdictions covered by an
appropriate Intergovernmental Agreement with the
US, information about financial accounts held by
U.S. taxpayers, certain non-financial foreign
entities in which US taxpayers hold a substantial
ownership interest and payments to Non-
Participating Financial Institutions.
The Fund is an FFI under FATCA and subject to the
FATCA rules. Investors are required to provide
certain information in order for the Fund to be
FATCA compliant. This information can be
provided by completing the relevant anti-money
laundering and counter-terrorism forms available
on Morningstar’s website.
Common Reporting Standard
The Common Reporting Standard (‘CRS’) is a
single global standard for collecting, reporting and
exchanging financial account information of
foreign tax residents to tax authorities (such as the
Australian Tax Office (‘ATO’)).
Australian Financial Institutions (‘AFIs’) such as
banks and investment funds are required to collect
and report on certain investor information to the
ATO in order to comply with the CRS. The ATO will
in turn exchange information with participating
jurisdictions.
As the Fund is an AFI, you agree to provide all the
necessary information and certification required
by Morningstar to meet our obligations under CRS.
Commonwealth Anti-Money Laundering and Counter-Terrorism Requirements Morningstar is required by the Commonwealth
Anti- Money Laundering and Counter-Terrorism
Financing Act 2006 to obtain additional information
from new investors as to their identity, source of
funds and similar matters, and to verify that
information by sighting appropriate
documentation. These requirements may also
apply in relation to existing investors.
New investors (and existing investors required to
provide additional information) can provide
additional information by completing the relevant
section of the application form on Morningstar’s
website. Please go to
morningstarinvestments.com.au/disclosure
and see ‘Application Form’ in the document
library. Details about the way in which additional
information can be verified are contained within the
application form. For example, individuals will be
required to produce a current photographic
identification document, such as a current
passport or driver’s licence, or to provide a
certified copy of the document, in order to verify
their identity details.
Morningstar reserves the right to request
information as is necessary to verify the identity of
any investor and their personnel (for example, if an
investor is a company, the identity of the company
directors may need to be verified) and to assess
the likelihood of the investor or its personnel being
involved in money laundering or terrorism
financing. Information that you provide may be
disclosed to the Australian Transaction Reports
and Analysis Centre under Australian law (or by
underlying managers resident in other countries
who are subject to similar legislation in their own
countries). You may not be informed if such a
disclosure is made. Otherwise your information will
be confidential.
If you do not provide the required information,
your application will not be processed until the
information requested has been provided and all
anti-money laundering and relevant checks have
been completed. This may mean that the units
may not be issued and redemption payments may
not be made within the time periods
contemplated in the PDS.
By applying for units through the PDS, you agree
that Morningstar may, in its absolute discretion, not
issue units to you, refuse the transfer of units you
wish to sell or purchase, delay, block or freeze any
transactions or cancel or redeem any units which
have been issued to you, if such action is
considered necessary or desirable in light of its
obligations under the Commonwealth Anti-Money
Laundering and Counter-Terrorism Financing Act
2006 or any relevant legislation. In the above
circumstances, Morningstar will not be liable to you
for any resulting loss.
Constitutions
The Fund is governed by a Constitution, as amended
from time to time, and the Constitution may relate to
several Funds or to an individual Fund. Each
Constitution sets out Morningstar’s obligations as
well as the rights of investors. Some key aspects of
the Constitutions have been summarised in this
Additional Information Document.
Morningstar may alter the Constitution as specified
in the Constitution and in accordance with the
law. The Corporations Act specifies that the
consent of investors (given at a meeting convened
and conducted in accordance with the
Corporations Act) is required for any alteration
unless Morningstar reasonably believes that the
alteration will not adversely affect the rights of
investors.
You may view a copy of the Constitution at
Morningstar’s offices on any Business Day or you
may obtain a copy free of charge by contacting
Morningstar on the contact details shown on the
last page of this document.
Compliance Plan
Morningstar has established a compliance plan for
the Fund, which sets out the measures to be
applied in operating the Fund to ensure compliance
with its Constitution and the law. Morningstar is
responsible for overseeing the compliance plan.
Classes of Units
Under the Constitution, units may be issued in one or
more classes and additional classes of units may be
created at any time. All units in a class will have
identical interests and rights and will be subject to
identical conditions. Where the Fund issues units of
different classes, the interests, rights and conditions
attached to the class of units may differ in relation to
fees.
Rights of Investors
Subject to the Constitution, investors are generally
entitled to:
× receive a share of the Fund’s distributable income;
× redeem units;
× transfer units;
× switch between Funds;
× receive confirmation of investment;
× receive acknowledgement of units held;
× receive annual audited accounts; and
× inspect the Fund’s Constitution.
If you are an Indirect Investor, you are not an investor
in the Funds (your IDPS operator is the investor).
Investor Meetings
Subject to the Constitution, investors are also entitled
to requisition, attend and vote at investor meetings
for any Fund in which they hold units. An investor is
bound by a resolution of investors, whether or not
they attend the meeting at which it is passed.
Interest in the Funds
Each unit issued in a Fund entitles the investor to a
beneficial interest in the total investments of the
Fund, but does not give the investor an interest in
any particular asset of the Fund.
Investor Liability
While the law in relation to investor liability has not
yet been settled, the Constitution limits an investor’s
liability in a Fund to the amount the investor has
invested or agreed to invest.
Termination of a Fund
Morningstar can terminate a Fund, subject to the
Corporations Act, at any time. If a Fund is terminated,
the Fund’s assets must be converted to cash where
possible and used to pay or provide for the Fund’s
liabilities (including those incurred in winding up the
Fund and any unpaid fees). In such an event, the
realisation of assets may be postponed.
Investors are entitled to a share of the balance of the
assets in accordance with the Fund’s Constitution.
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This will be the final distribution of the Fund, which
may include both a capital and income component.
Financial Information
The Fund’s annual report will be made available to
investors each year. You can request a copy of the
annual report by contacting Morningstar on the
contact details shown on the last page of this
document.
Borrowings
Under the Constitution, the Fund is permitted to
borrow. Generally, borrowings may be used to
facilitate short-term liquidity needs, and the
redemption of units, and to gain exposure to
derivatives, including for the purposes of achieving
target asset allocations. By virtue of the Fund’s
exposure to alternative investment strategies,
it may also be exposed implicitly to borrowings and
other liabilities.
Changes to the Funds
New funds may be added or existing Funds closed.
The Fund’s investment objective (including its
benchmark), asset classes, asset ranges and
currency strategy (if any) can be changed, without
prior notice in some cases. Investors will be
informed of any material change to the Fund as
required by law.
Net Asset Value (NAV)
The latest available NAV has been included in the ‘Investment Profile’ of ‘5. How We Invest Your Money’ in the respective PDS at the time of issue. The latest quarterly NAV is also disclosed in our Quarterly Fund Profiles available on our website morningstarinvestments.com.au/fund-performance as well as via the ASX Market Announcements Platform if the Fund is available via mFund.
Performance Information
Investment performance becomes outdated very
quickly. Past performance information has not been
included in the PDS.
If you require up-to-date Fund performance
information, please contact Morningstar on the
contact details provided on the last page of this
document.
Morningstar will provide the information to you free
of charge. In assessing any performance
information, you should bear in mind that past
performance is not a reliable indicator of future
performance.
Related Party Transactions
Morningstar receives a range of services from its
related parties, including Morningstar Australasia
Pty Ltd and Morningstar India Private Ltd. These
services are provided in accordance with a shared
services agreement.
Staff Investors are allowed to invest in the
Fund. Their investment is governed by
Morningstar’s staff investment policies and
procedures.
Morningstar Australasia Pty Ltd may directly
or indirectly invest in Funds offered by
Morningstar.
Conflicts of Interest If there is a material conflict between the duties of Morningstar in relation to its obligations to the Fund and its personal interests, Morningstar will disclose particulars of the conflict.
8. Definitions 'AFS Licence’ or ‘AFSL’ means Australian
Financial Services Licence.
‘ASIC’ means the Australian Securities
and Investments Commission.
‘Business Day’ means any day other than
Saturday and Sunday during which all banks are
open for general banking business in the state of
New South Wales.
‘CGT’ means Capital Gains Tax which is the tax you
pay on any capital gains.
‘Constitution’ means the Constitution of one or
more Funds, as amended from time to time, or the
Constitutions for all of the Funds, as the context
indicates.
‘Direct Investor’ is an investor who invests and
holds units directly in the Funds, and not through an
IDPS.
‘GST’ means Goods and Services Tax as defined
in A New Tax System (Goods and Services Tax)
Act 1999
‘IDPS’ means a master fund, wrap account,
investor directed portfolio service or similar
product (but does not include the ASX Managed
Fund Service).
‘Indirect Investor’ is an investor who gains
exposure to the Funds through an IDPS.
‘Investment Advice Fee’ is an advice fee that is
generally charged by your financial adviser when you
make an initial or additional investment in the Fund.
‘mFund’ is the managed funds settlement
service operated by the ASX.
‘Morningstar’ means Morningstar Investment
Management Australia Limited ABN 54 071 808
501, AFS Licence No. 228986, the Investment
Manager of the Funds, the issuer of units in the
Funds and the responsible entity of the Funds.
‘NAV’ means the Net Asset Value of a Fund and
is the value of all assets of the Fund less liabilities
of the Fund (excluding any amount representing
the value of the investors’ interests in the Fund or
rights attaching to units, unless they have
become due and payable to the relevant investor,
regardless of whether characterised as equity or
debt in the accounts of the Funds) and is
calculated in accordance with the Constitution of
the Fund.
‘Ongoing Advice Fee’ is an advice fee that is
generally charged by your financial adviser on a
regular basis for ongoing financial advice provided
to you.
‘PDS’ means Product Disclosure Statement.
‘RITC’ means Reduced Input Tax Credit as defined
in A New Tax System (Goods and Services Tax) Act
1999.
‘Staff Investor’ is an investor who is an employee
as defined by Morningstar’s internal human
resource policies and procedures governing its staff
investment program.
‘the Funds’ means the managed investment
schemes to which this document relates.
‘you’ or ‘your’ means an investor or prospective
investor in the Fund(s).
Contact Details Investors investing directly:
Attention: Morningstar Unit Registry
C/- Link Market Services Limited
PO Box 3721
Rhodes NSW 2138
Fax: +61 2 9287 0357
Investors using mFund:
Contact your financial adviser or broker
otherwise:
Responsible Entity and Issuer:
Morningstar Investment Management Australia Limited
Level 3, International Tower 1
100 Barangaroo Avenue
Barangaroo NSW 2000
Tel: 1800 951 999 (Toll Free)
Fax: +61 2 8572 9913
Web: morningstarinvestments.com.au
Email: [email protected]
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Level 3, International Tower 1 100 Barangaroo Avenue Barangaroo NSW 2000
Tel: 1800 951 999 (Toll Free) Fax: +61 2 8572 9913 [email protected]
morningstarinvestments.com.au